There were no mega-deals this week in the ever-consolidating North American cannabis industry, but, as usual, there’s plenty to talk about and for investors to digest.
Here’s a recap of the top newsmakers and headlines that caught our eyes here at Investor Intelligence. We’ll also take a look at what we are watching for next week.
Revenues up; losses, too
In a sign that the cannabis industry is maturing enough to have a more traditional “earnings season,” a number of companies released quarterly results this week.
Of course, performance differs from company to company, but there does seem to be a consistent theme of cannabis firms reporting increased revenues amid large losses.
Hardly surprising considering that the number of states where marijuana – recreational and medical – can be sold in the U.S. has increased, so it makes sense that improved sales would follow.
And, to make the most of the market opportunity, companies have to invest money.
Toronto-based Cronos Group reported first-quarter losses of 6.5 million Canadian dollars ($4.8 million), missing analyst expectations of CA$7 million.
The company’s net loss for the quarter rang in at CA$9 million, compared with CA$1.5 million in the same quarter of 2018.
Nasdaq-listed GW Pharmaceuticals also reported its first-quarter results, which received a boost from its new epilepsy drug, Epidiolex – currently the only naturally derived cannabis drug approved by the U.S. Food and Drug Administration.
In addition to the immediate uplift, the company released information that could boost long-term results: Clinical trials are showing positive results for expanding the conditions the medication can treat.
This, combined with the pending decision from European officials on approval as a registered drug, could boost sales across geographies.
Light at the end of the tunnel for U.S. legality?
The big story for the U.S. marijuana industry, of course, is if and when the drug will be made fully legal at a federal level.
While there are likely to be many false dawns ahead, one piece of news that caught our eye this week was the intention of Senate Minority Leader Chuck Schumer, a Democrat from New York, to reintroduce his bill to remove the drug from the U.S. controlled substances list, permitting states to regulate cannabis without fear of federal interference.
Such a move would be similar to the effects of the passage of the Farm Bill in removing hemp from the list.
Of course, the full implementation of the hemp industry at a federal level remains up in the air, but marijuana-related businesses would clearly welcome such a move, as would investors.
Other top stories worth a look:
- In another sign of marijuana warming at the federal level – something that should also warm the heart of investors – significantly more legal chiefs are now in favor of the drug than before. Thirty-three state attorneys general support cannabis banking reform compared with only 19 this time last year, and eight of those 33 were Republicans.
- States looking at hemp aren’t waiting for the federal government to take action. Several states – from New Hampshire to Hawaii and from Georgia to Wyoming – have adopted laws to give hemp farmers an opportunity to profit from the crop as soon as possible. Our June 1 edition of Investor Intelligence will include a deeper dive into this sector.
- And, outside the U.S., the Netherlands, long associated with cannabis culture, is conducting an experiment where a limited number of companies would be allowed to legally grow marijuana to supply to coffee shops that, in turn, would sell to consumers. The so-called wietexperiment could see the country become the first European country to allow commercial production of adult-use marijuana.
Next Week:
Big Canadian cannabis companies Aurora Cannabis and Tilray are among those reporting quarterly results next week. Investors may be focusing on updates on the company’s European businesses and on supply issues in Canada.
My colleague, Investor Intelligence Editor Lisa Bernard-Kuhn, will be back from this week’s IC3 West conference in Los Angeles and will have insights on what she learned from her two panel discussions.
As always, feel free to reach out to her directly at lisabk@mjbizdaily.com or me, Nick Thomas, at nickt@mjbizdaily.com.
Have a great weekend!
Nick Thomas
Finance Reporter
